BMO’s Decker Sees Room for Growth of U.S. REIT Market

Mark Decker Sr., vice chairman with BMO Capital Markets, joined REIT.com for a video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

Decker rebuffed the suggestion that the U.S. REIT market is approaching the upper limit of its growth. The universe of REITs in the United States will continue to expand as more sectors are added, according to Decker. He pointed to sectors such as data centers and farmland as examples of how the REIT approach to real estate investment will continue to grow.

“We’re still a very small part of a much greater whole,” he said in reference to the size of the REIT market versus investable real estate. "It’s a highly capital-intensive industry, and it’s going to get much larger.”

Looking ahead, Decker speculated that the net lease sector would see growth in the coming decade. Decker said he also expects to see more pure play companies emerge. Differentiated strategies among competitors could be another important theme, Decker said. So will the aging of the U.S. population, he said.

In terms of the real estate transactions market, Decker weighed in on the idea that public or private investors might have an upper hand in cutting deals for available properties. He pointed out that REITs generally enjoy a lower cost of capital and are disciplined in their operations. As such, he also noted that REITs “won’t chase properties,” meaning that they’re more likely to avoid risky buying opportunities.

REITs “will be very competitive on stable property acquisitions,” Decker said.